Goods and services ineligible for 8% VAT reduction from January 1, 2024 to June 30, 2024 in Vietnam

Goods and services ineligible for 8% VAT reduction from January 1, 2024 to June 30, 2024 in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

Goods and services ineligible for 8% VAT reduction from January 1, 2024 to June 30, 2024 in Vietnam

On December 28, 2023, the Government issued Decree 94/2023/ND-CP prescribing value-added tax reduction under Resolution 110/2023/QH15.

VAT on goods and services that are currently subject to 10% VAT shall be reduced, except the following goods and services:

- Telecommunication, financial activities, banking activities, securities, insurance, trading of real estate, metal and precast metal products, mining products (excluding coal mining), coke mining, refined oil, chemical products. Further details are provided in Appendix I enclosed with Decree 94/2023/ND-CP.

- Goods and services subject to excise tax. Further details are provided in Appendix II enclosed with Decree 94/2023/ND-CP.

- Information technology products and services as prescribed in the Law on information technology. Further details are provided in Appendix III enclosed herewith.

- VAT on goods and services of specific type as specified in Clause 1 of Article 1 of Decree 94/2023/ND-CP shall be reduced consistently in all stages, including import, production, processing and trading.

Coal products mined for sale (including coal products mined and then washed, sieved and classified under a closed process before they are sold) are eligible for VAT reduction.

Coal products in Appendix I enclosed with Decree 94/2023/ND-CP are not eligible for VAT reduction in any stages other than the mining stage.

Coal products produced under a closed process of economic corporations or groups shall be also eligible for VAT reduction.

In case any of the goods and services in Appendixes I, II and III enclosed with Decree 94/2023/ND-CP is not subject to VAT or is subject to 5% VAT in accordance with the Law on value-added tax, VAT on that good or service shall be paid in accordance with the Law on value-added tax and shall not be reduced.

Instructions on issuing VAT invoices for goods and services eligible for 8% VAT reduction in Vietnam under Decree 94/2023/ND-CP

Instructions on issuing VAT invoices for goods and services eligible for 8% VAT reduction in Vietnam according to Decree 94/2023/ND-CP are as follows:

- When issuing VAT invoices for goods and services eligible for VAT reduction, the business establishments specified in Point a Clause 2 of Article 1 of Decree 94/2023/ND-CP shall write “8%” on the “VAT rate” line, VAT amount payable, and total amount payable by the buyer on the issued invoice.

The good seller or service provider shall declare output VAT and the good buyer or service user shall declare and deduct input VAT according to the VAT amount written on the VAT invoice.

- When issuing sales invoices for goods and services eligible for VAT reduction, the business establishments specified in Point b Clause 2 of Article 1 of Decree 94/2023/ND-CP shall write the full amount of the good or service before reduction in the "Thành tiền" ("Amount") column, the amount payable after reduction (by 20% of the rate (%) on revenue) on the “Cộng tiền hàng hóa, dịch vụ” ("Total amount") line, and the note “đã giảm... (số tiền) tương ứng 20% mức tỷ lệ % để tính thuế giá trị gia tăng theo Nghị quyết số 110/2023/QH15” ("an amount of......., equivalent to 20% of the rate (%) used as the basis for calculating VAT, is reduced according to the Resolution No. 110/2023/QH15”) on the issued invoice.

If a business establishment prescribed in Point a Clause 2 of Article 1 of Decree 94/2023/ND-CP sells or provides goods or services subject to different tax rates, the tax rate on each good or service must be written on its issued VAT invoice as prescribed in Clause 3 of Article 1 of Decree 94/2023/ND-CP.

When a business establishment prescribed in Point b Clause 2 of Article 1 of Decree 94/2023/ND-CP sells goods or provides services, the reduced amount must be written on its issued sales invoice as prescribed in Clause 3 of Article 1 of Decree 94/2023/ND-CP.

In case an invoice indicating the VAT rate or the rate (%) used as the basis for calculating VAT which is not yet reduced according to Decree 94/2023/ND-CP has been issued, this invoice shall be treated by the seller and the buyer in accordance with regulations of law on invoices and records. The seller shall adjust output VAT and the buyer shall adjust input VAT (if any) according to the invoice which has been corrected.

The business establishments specified in Article 1 of Decree 94/2023/ND-CP shall make and submit the declaration of their goods and services that are eligible for VAT reduction using Form No. 01 in Appendix IV enclosed with Decree 94/2023/ND-CP together with the VAT return form.

Decree 94/2023/ND-CP takes effect from January 1, 2024 to June 30, 2024.

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE